Box profits and the acquisition of Speirs & Jeffrey have hit profits at Rathbones to the tune of £19.4m as it reveals an intermediary push in its interim results.
While total funds under administration hit a record £49.2bn for the period ended 30 June 2019, underlying profit before tax fell 3.5% to £46.6m compared with £48.3m a year ago. The underlying operating margin is currently 27% compared to 31.5% a year ago and earnings per share decreased to 71.4p compared with 76.1p a year ago.
Investment management net organic outflows totalled £100m compared to £400m net inflows in the previous year. However, unit trust inflows were up to £400m compared to £300m in the previous period.
Risk-free box profits end
Risk-free box profits were flagged among non-recurring factors that contributed to the fall in profits with their contribution just £200,000 compared to £1.8m in last year’s financial results. The FCA banned the revenue source in its asset management market study and Rathbones ceased applying them in mid-June.
Rathbones was also hit by an unexpected FSCS levy charge of £1.8m in the first half estimated to be £3.8m for the full year compared to £2.8m in 2018. Deferred executive awards connected to recent retirements were another non-recurring cost at £900,000.
The costs of the acquisition of Speirs & Jeffrey also resulted in a £17.8m hit to profits before tax although this was consistent with the £29m flagged for the full year.
Building out intermediary distribution
The results also revealed Rathbones was looking to add hires to its intermediary distribution team focused on selling its DFM proposition to financial advisers.
Non-intermediated UHNW individuals will be another area of focus for the business as Rathbones channels these clients towards existing investment teams rather than promoting its own advisory proposition.
The results said more details on these strategic growth areas would be provided in October.
Rathbones chief executive Paul Stockton (pictured) said: “It has been a busy first half for Rathbones as we successfully migrated our largest acquisition to date, underwent a smooth leadership transition and posted the highest funds under management and administration in our history.
“Investment markets look likely to remain volatile in the second half but we retain a cautiously optimistic outlook. The UK wealth industry continues to present positive opportunities for future growth which we will actively pursue.”
